Monitor and NHS England have proposed a single efficiency factor of between 3 and 5 per cent for 2015-16 across the health service.

The proposal is set out in an engagement document released last week by the two organisations, which said they were also exploring the introduction of a “leakage factor” into the NHS.

Leakage is defined in the document as any actions taken by a provider to cut costs other than through improving efficiency.

The two organisations hope that finances can be improved by a better understanding of leakage.


The efficiency requirement should reflect the ‘best estimate’ of what it costs to deliver services, the FTN said

“To ensure that value for money is achieved in the NHS; providers remain financially sustainable; and choice and competition are not stifled, it is important that we understand these additional actions well,” the document states.

“We will be engaging further on this issue and on the policy measures we could take to address some of these actions.”

Siva Anandaciva, head of analysis at the Foundation Trust Network, said that the efficiency requirement should be “credible” and reflect the “best estimate” of what it costs to deliver services.

He added: “Last year an efficiency requirement of 4 per cent was used and the provider sector ended over £100m in deficit.

“NHS providers have delivered world class levels of sustained efficiency, but we are concerned that the potential for a higher efficiency requirement in 2015-16 will tip providers further into deficit with knock-on consequences for staffing and services.

“We cannot let a short term focus on containing costs override the need to support transformative service improvements for patients that will deliver greater efficiencies in the long term.”

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